1. Jeanie acquires an apartment building in 2003 for $260,000 and sells it for $500,000 in 2014. At the time of sale there is $78,000 of accumulated straight-line depreciation on the apartment building. Assuming Jeanie is in the highest tax bracket for ordinary income and the Medicare surtax applies, how much of her gain is taxed at 28.8 percent?
a. None
b. $240,000
c. $318,000
d. $162,000
e. $78,000
2. Virginia has a casualty gain of $5,000 and a casualty loss of $2,500, before reduction by the $100 floor. The gain and loss were the result of two separate casualties, and both properties were personal-use assets. What is Virginia’s gain or loss as a result of these casualties?
a. $5,000 capital gain and $2,500 capital loss
b. $5,000 capital gain and $2,400 itemized deduction, subject to the 10 percent of adjusted gross income limitation
c. $5,000 capital gain and $2,500 itemized deduction, subject to the 10 percent of adjusted gross income limitation
d. $5,000 capital gain and $2,400 capital loss
e. None of the above
3. Pat sells real estate for $30,000 cash and a $120,000 5-year note. If her basis in the property is $90,000 and she receives only the $30,000 down payment in the year of sale, how much is Pat’s taxable gain in the year of sale using the installment sales method?
a. $60,000
b. $30,000
c. $15,000
d. $12,000
e. $0
4. Fred and Sarajane exchanged equipment in a qualifying like-kind exchange. Fred gives up equipment with an adjusted basis of $14,000 (fair market value of $15,000) in exchange for Sarajane’s equipment with a fair market value of $12,000 plus $3,000 cash. How much gain should Fred recognize on the exchange?
a. $3,000
b. $2,000
c. $1,000
d. $0
e. None of the above
5. What is Sarajane’s basis in the equipment received in the exchange described in Question 14, assuming her basis in the equipment given up was $12,000?
a. $0
b. $12,000
c. $14,000
d. $15,000
e. None of the above
6. Oscar, a single taxpayer, sells his residence of the last 10 years in January of 2014 for $190,000. Oscar’s basis in the residence is $45,000, and his selling expenses are $11,000. If Oscar does not buy a new residence, what is the taxable gain on the sale of his residence?
a. $145,000
b. $134,000
c. $45,000
d. $9,000
e. $0
7. Jim, a single taxpayer, bought his home 20 years ago for $25,000. He has lived in the home continuously since he purchased it. In 2014, he sells his home for $200,000. What is Jim’s taxable gain on the sale?
a. $0
b. $50,000
c. $125,000
d. $175,000
8. Susan, a single taxpayer, bought her home 25 years ago for $30,000. She has lived in the home continuously since she purchased it. In 2014, she sells her home for $300,000. What is Susan’s taxable gain on the sale?
a. $0
b. $20,000
c. $250,000
d. $270,000
9. Kevin purchased a house 20 years ago for $100,000 and he has always lived in the house. Three years ago Kevin married Karen, and she has lived in the house since their marriage. If they sell Kevin’s house in December 2014 for $425,000, what is their taxable gain on a joint tax return?
a. $0
b. $75,000
c. $125,000
d. $250,000
10. Gene, a single taxpayer, purchased a house 18 months ago for $350,000. If Gene sells his house due to unforeseen circumstances for $550,000 after living in it for a full 18 months, what is his taxable gain?
a. $0
b. $12,500
c. $50,000
d. $200,000